The Impact of Reducing Your Merchant Fees

Merchant fees are fees that you pay to credit card companies to process credit cards that you accept from your customers. These fees typically range anywhere from 1.8% to 2.8%, but they can be as high as 3% to 3.5% if you have a lot of fraud, credits or returns.

How do you reduce your merchant fees? Recently, TGG had a client that was processing $3 million a year with credit cards and paying 3.5% in merchant fees. We were able to come in and look at alternative vendors to get their merchant fees down to 2.5%. This 1% difference will save them $30,000 per year. As a 10% net margin business, that means it’s the equivalent of us selling a $300,000 new project for this business.

Reducing your merchant fees may seem like a small change, but it has a magnifying effect to your bottom line. Look at your merchant fees, at least on an annual basis, to make sure you’re managing and competitively pricing them out so that you get the lowest possible fees and drive profitability into your business.

This post was reviewed by our team of accounting and financial experts. TGG’s mission is to make business owners’ lives better through excellent financial management. We strive to provide the most up-to-date and objective information on accounting-related topics so our readers can make informed decisions based on factual content. All posts undergo a review process with at least one member of our Leadership Team to ensure accuracy.

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